HOUSE OF REPRESENTATIVES

H.B. NO.

607

THIRTY-SECOND LEGISLATURE, 2023

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that the cost of interisland transportation is a bottleneck for market access by food producers in Hawaii. This issue is also recognized by the United States Department of Agriculture, which administers a reimbursement transportation cost payment program for geographically disadvantaged farmers and ranchers to reimburse producers for a portion of the cost to transport agricultural commodities or inputs used to produce an agricultural commodity. The reimbursement transportation cost payment program helps eligible farmers and ranchers outside the contiguous United States, including farmers and ranchers in Hawaii and the Pacific, offset a portion of the cost of transporting agricultural products or inputs used to produce an agricultural commodity over long distances. Payments from the program are calculated based on the costs incurred for transportation of the agricultural commodity or inputs during a fiscal year, subject to an $8,000 per producer cap per fiscal year.

The legislature further finds that providing an income tax credit like the reimbursement transportation cost payment program that similarly reimburses producers for a portion of the cost to transport agricultural goods between the counties will reduce cost impacts to farm viability and consumer food price and support progress towards the State's Aloha+ Challenge commitment to increase local food consumption and production.

Accordingly, the purpose of this Act is to establish an interisland produce shipping tax credit to alleviate the costs of interisland shipping for farmers and ranchers in the State.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235-    Interisland produce shipping tax credit. (a) Each producer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit shall be twenty per cent of the input transportation costs for the shipping of produce and agricultural goods between counties, up to a maximum of $20,000 per producer.

(c) The tax credits shall be distributed annually as follows:

(1) Up to fifty per cent of the total tax credits available may be claimed by farmers and ranchers;

(2) Up to thirty per cent of the total tax credits available may be claimed by food hubs; and

(3) Up to twenty per cent of the total tax credits available may be claimed by broad line distributors.

The total amount of tax credits allowed under this section shall not exceed $5,000,000 for all taxpayers in any taxable year.

(d) In the case of a partnership, S corporation, estate, trust, or any developer of a commercial building, the tax credit allowable is for renovation costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(e) If the tax credit under this section exceeds the producer's net income tax liability, the excess of the credit over liability may be used as a credit against the producer's net income tax liability in subsequent years until either the credit is exhausted, or for a period of five years, whichever is earlier. All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the producer to furnish reasonable information and verifiable records to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

(g) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(h) As used in this section:

"Food hub" means a business or organization that actively manages the aggregation, distribution, and marketing of source-identified food products, primarily from local producers, to strengthen the business or organization's ability to satisfy wholesale, retail, and institutional demand.

"Input transportation costs" means transportation costs of inputs used to produce an agricultural commodity, including but not limited to air freight, ocean freight, and land freight of chemicals, feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, and other inputs.

"Producer" means any farmer or rancher who is an individual, group of individuals, partnership, corporation, estate, trust, association, cooperative, broad line distributor, food hub, or other business enterprise or other legal entity who shares in the risk of producing an agricultural commodity in substantial commercial quantities and who is entitled to a share of the agricultural commodity from the agricultural operation.

"Verifiable records" means evidence that is used to substantiate the amount of eligible credits per producer that can be verified by the director of taxation through an independent source."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on June 30, 3000.


 


 

Report Title:

Producers; Agricultural Goods; Interisland Shipping; Income Tax Credit

 

Description:

Creates an income tax credit for taxpayers who are farmers, or are producers of agricultural commodities, cooperatives, broad line distributors, or food hubs who ship products and agricultural goods between counties. Effective 6/30/3000. (HD1)

 

 

 

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